Boeing aid scrutinized
Published 10:01 pm Monday, January 31, 2011
Should the city of Everett and state of Washington be told to stop subsidizing the Boeing Co.?
Rival aerospace giant, Airbus, thinks so.
The World Trade Organization issued a final ruling on Monday in a case brought against Boeing and the U.S. government by Airbus and the European Unio
n. Airbus said the ruling confirms “that Washington state and the city of Everett must stop subsidizing Boeing.”
The EU alleges that Boeing received almost $24 billion in illegal subsidies, such as research grants and free use of technology, from NASA, the Department of Defense, and the states of Washington, Illinois and Kansas. However, how much of this aid the WTO deemed illegal won’t be clear until Monday’s report is published later this spring.
“This solid report sheds further light on the negative consequences for the EU industry of these U.S. subsidies and provides a timely element of balance in this long-running dispute,” EU trade spokesman John Clancy said in a statement.
Airbus estimates that it has lost at least $45 billion through lost sales and lower prices as a result of Boeing’s subsidies.
In 2003, the Legislature created $3.2 billion in tax incentives for aerospace manufacturers as incentive for Boeing to select Everett for its 787 final assembly factory. On Monday, Airbus said it expects the final WTO ruling to say that Boeing wouldn’t have been able to launch its popular 787 jet without government help.
“When the final report comes out, we’ll look at it with federal trade officials and take any appropriate next steps,” said Scott Whiteaker, spokesman for Gov. Chris Gregoire. “We stand by the programs that have helped the aerospace industry grow.”
Last summer, the Geneva-based trade body faulted European governments for illegally subsidizing Airbus, a unit of European Aeronautic Defence and Space Co. in a separate case brought by Boeing and the United States.
On Monday, Boeing also claimed that the WTO’s ruling had come out in its favor. “The WTO rejected almost all of Europe’s claims against the United States,” it said in a statement. “Nothing in today’s reports even begins to compare to the $20 billion in illegal subsidies that the WTO found last June that Airbus/EADS has received.”
Boeing officials said the ruling found $2.6 billion in illegal subsidies.
That interpretation was echoed by the office of the U.S. Trade Representative. “The United States is confident that the WTO will confirm the U.S. view that European subsidies to Airbus dwarf any subsidies that the United States provided to Boeing,” spokeswoman Nefeterius Akeli McPherson said in a statement.
The WTO body can’t force countries to eliminate subsidies, but it can authorize retaliatory tariffs against products from countries that fail to comply with rulings. Considering past delays and future appeals in the Airbus and Boeing cases that stage is likely years away.
Trade analysts say the dispute will likely be resolved by negations between all parties. The outcome could shape the future structure of the global aviation market, which is expected to be worth some $3 trillion over the next two decades and has attracted rivals from China, Brazil and other countries.
Airbus and Boeing are trying to spin the WTO’s rulings in their favor as they vie to secure a $35 billion contract to sell refueling jets to the U.S. Air Force.
